Petition for Writ of Certiorari — Esparza v. Valdez

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In The eee

Supreme Court of the United States

October Term, 1988

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PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

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DRIAN IFATRICK LAW

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egal Alda Foundation of

Los Angele

1636 W. Eighth St., Suit

M47 Los Angeles, California 9001

MM. TAUBMAN 113) 389-3581

radi C oalition of | Cpa

‘rvices Programs Counsel of Recor

5 Sherman St., Suite 71|

Poe CHARLES WHEEL!

nver, Colorado 80203 a

IMEBECCA CHIAO

N MEYER Nationa! Center for

lorado Rural Legal Immigrants’ Rights

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services, Inc 1636 W. Eighth St., Suite 215

I = — 1 4 | trarny 117

E. Colfax Ave., Suite 104 Los Angeles, Calitornia 9001

ver, Colorado 80206 (213) 487-2531

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PRESENTED

QUESTIONS

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LIST OF PARTIES

The parties before this Court and to the proceedings

below are.

1. Petitioners Maria Esparza, Eudesimo Arteaga,

Reyes Nunez-Ortega, Bahman Zanjani, Daniel Agonafer,

Jose Sandoval, Kazimierez Kozak, and Consuelo Sand-

oval, on behalf of themselves and all others similarly

situated.

2. Respondents Ruben Valdez, Executive Director,

Colorado Department of Labor; John Kezer, Director,

Division of Employment and Training; and the Industrial

Commission of Colorado (Ex-Officio the Unemployment

Compensation Commission). All respondents were

named in their official capacities only. The current suc-

cessors of the named respondents are: John J. Donlon,

Executive Director, Colorado Department of Labor and

Employment; and Robert Husson, Director, Division of

Labor. By operation of Colo. Rev. Stat. § 8-1-102, the

Industrial Commission of Colorado has been replaced by

the Industrial Claim Appeals Panel.

The provision of Rule 28.1 concerning corporations is

not applicable to this petition.

lll

TABLE OF CONTENTS

Page

SE OTN Se ee 2

re es vs ves 8.0 VOW has koa a eee bos 2

CONSTITUTIONAL AND STATUTORY PROVI-

es oS are 3

Sy ig bad Oe) +

REASONS FOR GRANTING THE WRIT ........... 12

1. The Tenth Circuit holding that the Eleventh

Amendment bars a federal court from ordering

payment of “retroactive” unemp!oyment insur-

ance benefits from an unemployment trust fund

is in conflict with the law of the Third, Fourth,

Fifth, Seventh and Ninth Circuits. ............. 12

Il. This Court should examine the important ques-

tion whether Hans v. Louisiana, 134 U.S. 1 (1890),

was incorrectly decided and should be over-

a lea a 20

cate ccna eedcaeeuucaee 23

APPENDIX

meomrae te tenth Circuit...........20......4.. la

Memorandum Opinion and Order of the District

ee ees cab ea bales 19a

Amended Judgment of the District Court ........ 25a

eeeemena or tre tenth Circuit ................... 27a

TABLE OF AUTHORITIES

CASES

Arteaga v. Industrial Commission, 703 P.2d 654

(Colo. App. 1985), aff'd, 735 P.2d 473 (Colo.

tt PP Cee Pree eC rrr seer re By Oy Oe VO,

Almond v. Boyles, 792 F.2d 451 (4th Cir. 1986), cert.

denied, 479 U.S. 1091, 107 S.Ct. 1302 (1987)....

Atascadero State Hospital v. Scanlon, 473 U.S. 234,

RO SIGE Re a sd eee era un eens

Berger v. Heckler, 771 F.2d 1556 (2d Cir. 1985) .......

Blake v. Kline, 612 F.2d 718 (3d Cir. 1979), cert.

denied, 447 U.S. 921, 100 S.Ct. 3011

Ce ee ar ee oer ema 16,

Bowen v. Hackett, 387 F.Supp. 1212 (D.R.I. 1975) .....

Brown v. Porcher, 660 F.2d 1001 (4th Cir. 1981), cert.

denied, 459 U.S. 1150, 103 S.Ct. 796 (1983), over-

ruled on other grounds, Wimberly v. Labor &

Industrial Relations Commission, 479 U.S. 511, 107

Ete ta RL, 9 ERA epee tes ti; iz

Division of Empioyment and Training v. Turynskt, 735

ee ee eg Or eS tne ey

Edelman v. Jordan, 415 U.S. 651, 94S.Ct. 1347 (1974)

see acta Chia Wk 6 @ Re ata ora eae SOD ee aoe 14,15,

Green v. Mansour, 474 U.S. 64, 106 S.Ct. 423 (1985

as Seeks OR Co RCO eas eRe 14,

Hanna v. Toner, 630 F.2d 442 (6th Cir. 1980), cert.

denied, 450 U.S. 919, 101 S.Ct. 1365 (1981)........

Hans v. Louisiana, 134 U.S. 1, 10 S.Ct. 504 (1890)

Holley v. Lavine, 553 F.2d 845 (2d Cir. 1977), cert.

denied, 435 U.S. 947, 98 S.Ct. 1532 (1978)......

Page

Aas

TABLE OF AUTHORITIES - Continued

Page

Hutchison v. Lake Oswego School District, 519 F.2d

Pate SOR Sen RIE: aie do en ack Sale ee ates 17

Jenkins v. Bowling, 691 F.2d 1225 (7th Cir. 1982) ..... 15

Kostelic v. Bernardi, 538 F.Supp. 620 (N.D.II. 1982)....15

Migra v. Warren City School District, 465 U.S. 75,

500 BAX. ONE CNN) ct een 8

Miller-Davis Co. v. Illinois State Toll Highway

Authority, 567 F.2d 323 (7th Cir. 1977)............. 17

New York Telephone Co. v. New York State Dept. of

Labor, 434 F.Supp. 810 (S.D.N.Y. 1977), rev’d on

other grounds, 566 F.2d 388 (2d Cir. 1977), aff'd,

450: WS. SUS, SR SAR, BEER Urea ao ck cect aneoees: 15

Owens v. Okure, No. 87-56, Slip Opinion (January

i EN ayes cues a ee esa ee tee 15

Papasan v. Allain, 478 U.S. 265, 106 S.Ct. 2932

SPR ice iia pe den cae vee s eee ee bos One ae 20

Salida School District v. Morrison, 732 P.2d 1160

eed Pre eae Py eC rer emia gn 8

Sandoval v. Colorado Division of Employment, 757

P.2d 1105 (Colo. App. 1988), cert. denied (Colo.

At Cee te. Se ba ee eee 5, 14

Schiff v. Williams, 519 F.2d 257 (5th Cir. 1975) ....... 17

Welch v. Texas Dept. of Highways, ___ U.S. __, 107

Bib 2) ASA oe eee 20, 21, 22

STATUTES

oh ALG GSO he ne ee ee eee 19

De 5K, Be Sa ae ch ee ee 19

vil

TABLE OF AUTHORITIES - Continued

Page

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I GN cic cee scence casccsasavrssunes 7

amo mey, oral. B-72-110K5). 20 oi ee ee ete 18

eS ES ae Sy 0 | da ae 5

coe, meu. Stat. © 8-74-1068 . 2... ee eect 8

Og an Ee yg oh) |G | ee 18

Colo. Rev. Stat. § 8-77-102(1).............. Phere ek 18

ee ee LM. OF FIGS). ons a eects sens awes 18

ua, ev. stat. & 8-7 7-102(4). ... 0... ccc ea snes 18, 19

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Constit

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iendment to the

TY)

Lil

In The

Supreme Court of the United States

October Term, 1988

MARIA ESPARZA, et al.,

- etitioners

RUBEN VALDEZ, Executive Director,

Colorado Department of Labor, et al.,

Respondents.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

—

Petitioners Maria Esparza, Eudesimo Arteaga, Reyes

Nunez-Ortega, Bahman Zanjani, Daniel Agonafer, Jose

Sandoval, Kazimierez Kozak, and Consuelo Sandoval, on

behalf of themselves and all others similarly situated,

pray that a writ of certiorari issue to review the judgment

of the United States Court of Appeals for the Tenth Cir-

cuit entered in the above-entitled proceeding on Novem-

ber 30, 1988.

OPINIONS BELOW

The opinion of the Court of Appeals for the Tenth

Circuit is reported at 862 F.2d 788, and is reprinted in the

appendix hereto at la.

The memorandum opinion and order, as amended, of

the U.S. District Court for the District of Colorado is

reported at 612 FSupp. 241, and is reprinted in the

appendix hereto at 19a.

JURISDICTION

Invoking federal jurisdiction under 28 U.S.C. §§ 1331

and 1343(a)(3), petitioners in June 1984 initiated this suit

in the District of Colorado in order to obtain relief pur-

suant to 42 U.S.C. § 1983 against various Colorado state

officials. After trial on a motion for preliminary relief, the

district court on June 25, 1985, dismissed without preju-

dice all the claims of petitioners on jurisdictional

grounds, namely, that they were required first to pursue

“adjudicative processes” available before a “state admin-

istrative tribunal”. 23a-24a.

On November 30, 1988, the Tenth Circuit entered a

judgment affirming the order of dismissal by the district

court, but on other grounds, namely, that the claims for

prospective relief were moot and that the claims for retro-

active relief to redress past violations of federal law were

barred by the Eleventh Amendment. 13a, 18a. No petition

for rehearing was sought.

The jurisdiction of this Court to review the judgment

of the Tenth Circuit is invoked under 28 U.S.C. § 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The Eleventh Amendment to the U.S. Constitution:

The Judicial power of the United States shall not be

construed to extend to any suit in law or equity,

commenced or prosecuted against one of the United

States by Citizens of another State, or by Citizens or

Subjects of any Foreign State.

Federal Unemployment Tax Act, 26 U.S.C.

§ 3304(a)(14)(A):

[C]ompensation shall not be payable on the basis of

services performed by an alien unless such alien is an

individual who was lawfully admitted for permanent

residence at the time such services were performed,

was lawiully present for purposes of performing

such services, or was permanently residing in the

United States under coior of law at the time such

services were performed (including an alien who was

lawfully present in the United States as a result of the

application of the provisions of section 203(a)(7) or

section 212(d)(5) of the Immigration and Nationality

oo?) Se

42 U.S.C. § 1983:

Every person who, under color of any statute, ordi-

nance, regulation, custom, or usage, of any State... ,

subjects, or causes to be subjected, any citizen of the

United States or other person within the jurisdiction

thereof to the deprivation of any rights, privileges, or

immunities secured by the Constitution and laws,

shall be liable to the party injured in an action at law,

suit in equity, or other proper proceeding for

Tearess... .

nes

STATEMENT OF THE CASE

Petitioners are eight individual aliens who were

denied unemployment insurance benefits by Colorado

state authorities. Each of the petitioners lawfully earned

wages while residing in the United States and, on the

basis of those wages, properly made claims for unem-

ployment insurance benefits. In each instance, the respon-

dent Colorado Department of Labor, Division of

Employment and Training (Division), denied them unem-

ployment insurance benefits because of their status as

aliens, either outright upon initial application or by

charging them with an overpayment for benefits previ-

ously paid.

Seeking declaratory and injunctive relief pursuant to

42 U.S.C. § 1983, including retroactive payment of bene-

fits wrongfully withheld, petitioners initiated a class

action suit in June 1984.! Specifically, petitioners’ Com-

plaint alleged that it was the practice and policy of the

Division categorically to deny unemployment insurance

benefits to all aliens, except for those applicants who

possessed a permanent resident visa (also known as a

“yreen card” or “alien registration card”) during the

' Four of the petitioners, Maria Esparza, Eudesimo Arte-

aya, Reyes Nunez-Ortega, and Bahman Zanjani, initiated the

suit. Five months later, on November 8, 1984, the district court

entered an order joining three of the other petitioners, Daniel

Agonafer, Jose Sandoval, and Kazimierez Kozak. The eighth

petitioner, Consuelo Sandoval, filed a motion for joinder as a

party plaintiff on June 24, 1985, but the motion was denied the

following day in conjunction with the district court order

dismissing the case. 24a.

“earnings” or “base period” utilized for determining

monetary eligibility for benefits. That is, the Division

would determine an alien eligible for benefits if “lawfully

admitted for permanent residence”, but as a practical

matter would not do so for aliens who fit the other two

categories under the Federal Unemployment Tax Act

(FUTA) which afford eligibility to aliens “permanently

residing under color of law” or “lawfully present for

purposes of performing services”. See, 26 U.S.C.

§ 3304(a)(14)(A).?

Petitioners also alleged that the respondent Indus-

trial Commission of Colorado, the administrative tribunal

within the Colorado Department of Labor which deter-

mined unemployment insurance appeals taken from the

Division, did recognize that aliens were eligible under the

aforementioned three categories, but in practice utilized

° As a condition of participation in the unemployment

insurance program, each state must adopt state laws which

conform to the requirements of the Federal Unemployment Tax

Act (FUTA) and Title Ill of the Social Security Act. See, 26

U.S.C. § 3304; 42 U.S.C. § 501 et seq. Colorado has incorporated

the alien eligibility provisions of FUTA verbatim into the Colo-

rado Employment Security Act, Colo. Rev. Stat. § 8-73-107(7),

except for substitution of the word “compensation” for “bene-

fits”. 4a. See, Industrial Commission v. Arteaga, 735 P.2d 473, 477

(Colo. 1987). Colorado courts have consistently held that this

conforming state law provision is to be interpreted to have the

same meaning as the alien eligibility provisions of FUTA, 26

U.S.C. § 3304(a)(14)(A). See, e.g., Arteaga, supra, 735 P.2d at 476;

Sandoval v. Colorado Division of Employment, 757 P.2d 1105, 1107

(Colo. App. 1988), cert. denied (Colo. S.Ct. October 17, 1988).

vague, inconsistent and ill-defined criteria in determining

such claims.?

The district court deferred determination of class

certification? and instead, on December 6, 1984, held an

3 In addition to claims under FUTA, petitioners alleged

violations of the prompt payment “when due” requirements of

the Social Security Act, 42 U.S.C. § 503(a)(1), and the Due

Process and Equal Protection clauses of the Fourteenth Amend-

ment to the U.S. Constitution. Given that the Division recog-

nized only one category of eligible aliens, and the Industrial

Commission recognized all three categories but did so in an

inconsistent manner, petitioners alleged that they were sub-

jected to conflicting eligibility criteria and that their entitle-

ments to benefits were determined in an arbitrary and

capricious manner, in violation of their rights to due process

and equal protection under the law.

In subsequent proceedings in state court where some of

the petitioners had pursued judicial review of their individual

administrative decisions denying benefits, the Colorado

Supreme Court held that “the [Industrial C]lommission’s rul-

ings in these cases are not consistent.” Industrial Commission v.

Arteaga, 735 P.2d 473, 475 n.3 (Colo. 1987).

+ On July 12, 1984, petitioners filed a motion for class

certification supported with documentation from the Division

that indicated that in Colorado approximately 70 aliens a

month applied for unemployment benefits. Based upon that

figure, petitioners estimated that approximately 4,620 aliens

had applied for benefits between 1979 and the filing of suit.

Motion and Memorandum in Support of Class Certification,

filed July 12, 1984, at 4 and attached PX 26 and PX 27 (Division

Statistics regarding alien applicants for May and July 1983).

It is clear that the district court would have deemed relief

on a class-wide basis appropriate had it not dismissed the case

on jurisdictional grounds. See, 23a.

evidentiary hearing on petitioners’ motion for a class-

wide preliminary injunction. At the close of petitioners’

case, respondents offered no significant evidence in

rebuttal.

On June 25, 1985, the district court issued its mem-

orandum opinion and order, construing only one part of

FUTA, i.e., the provision pertaining to aliens “perma-

nently residing under color of law” (PRUCOL). See

amended judgment, entered July 5, 1985. 25a-26a.

At the same time, the district court denied relief and

dismissed the Complaint without prejudice, essentially

On jurisdictional grounds. Apparently the view of the

district court was that the character of the petitioners’

individual claims somehow precluded class representa-

tion, 6a, and that while petitioners presented a justiciable

“case or controversy”, the district court simply lacked the

power to adjudicate such claims. Therefore, petitioners

instead would have to pursue relief through “adjudica-

tive processes” available before a “state administrative

tribunal”. 23a.

On appeal to the Tenth Circuit, petitioners contended

that the district court had improperly dismissed the case

on jurisdictional grounds, misconstrued the PRUCOL

provision of FUTA, erred by failing to consider their

other statutory and constitutional claims, erred in not

certifying a class, and improperly denied them attorney

fees and costs under 42 U.S.C. § 1988.

While this action was being prosecuted in federal

court, three of the petitioners pursued individual appeals

of the administrative denial of benefits in the Colorado

state courts. Ultimately, the Colorado Supreme Court

ruled in favor of al! three petitioners, finding them PRU-

COL eligible within the meaning of FUTA. See, Industrial

Commission v. Arteaga, 735 P.2d 473 (Colo. 1987); Division

of Employment and Training v. Turynski, 735 P.2d 469 (Colo.

1987). Subsequently, two other petitioners were granted

relief by respondents because of state administrative

appeals they had pending at the time the Arteaga and

Turynskt decisions were announced. 6a.

As a result of these parallel proceedings in the Colo-

rado state court system, several months after appellate

oral argument the Tenth Circuit issued an order to show

cause why the appeal should not be dismissed as moot

because of the preclusive effect of these recent Colorado

Supreme Court decisions. The parties and an amicus cur-

iae took varying positions. Petitioners contended that the

case was not moot because some of the named plaintiffs

had not yet obtained relief, that those who had obtained

relief could still act as class representatives, and that no

preclusive effect could be given to either the Colorado

Supreme Court decisions or the unreviewed state admin-

istrative decisions affecting various petitioners.®

> By operation of the Full Faith and Credit statute, 28

L.S.C. § 1738, state law determines what preclusive effect, if

any, should be given to a state judgment in federal court. Migra

v. Warren City School District, 465 U.S. 75, 81, 104 S.Ct. 892, 896

(1984). Under Colorado common law preclusion principles, no

preclusive effect can be given to an unemployment insurance

decision in a subsequent civil rights action pursuant to 42

L.S.C. § 1983. Salida School District v. Morrison, 732 P.2d 1160,

1164-65 (Colo. 1987). Essentiaily the same result is dictated by

recent amendments to the Colorado Employment Security Act.

Salida School District, supra, 732 P.2d at 1164 n.2. See, Colo. Rev.

Stat. § 8-74-108.

The Tenth Circuit never addressed the concerns

about claim and issue preclusion that it posed in its order

to show cause. Instead, it determined that the claims for

prospective relief were moot, given the favorable rulings

obtained by some of the petitioners in the parallel state

court proceedings:

At most, plaintiffs in the present case seek a declara-

tion that an otherwise eligible alien claimant qualifies

under PRUCOL whenever the INS knows of the

alien’s presence in the United States and, by either

action or inaction, has acquiesced in his continued

presence. We believe the Colorado decisions have

adopted such an interpretation; at least they clearly

have adopted a standard that would provide relief to

many more of the individual and class plaintiffs than

under the district court’s standard.

See, 9a. The Tenth Circuit concluded that, in any event,

recent changes in immigration law and agency directives

from the U.S. Department of Labor to state unemploy-

ment programs had rendered the need for prospective

relief moot. 11la-13a.

The Tenth Circuit determined, however, that the

claims of some of the petitioners and the putative class

for retroactive relief were not moot because they chose

not to appeal in the state courts and, therefore, had not

reaped the benefits of the Arteaga and Turynski decisions,

supra.® 13a. Nevertheless, the Tenth Circuit held that peti-

tioners could not obtain retroactive relief in federal court

® Respondents conceded before the Tenth Circuit that peti-

tioners Daniel Agonafer and Consuelo Sandoval “have appar-

ently not received relief from either the state courts or the

(Continued on following page)

in order to obtain past unemployment benefits wrong-

fuliy withheld. 18a.

Even though the respondent state officials never

raised it as a defense before the district court or the court

of appeals, the Tenth Circuit, sua sponte, and without the

benefit of briefing on the issue, proceeded to determine if

the Eleventh Amendment bars any claim asserted.

The Tenth Circuit concluded that the Eleventh

Amendment bars any claim for retroactive relief in this

case. It acknowledged that the Fourth Circuit, as well as

(Continued from previous page)

Division of Employment and Training” and “that their circum-

stances are sufficiently similar to those of the other plaintiffs so

that such relief should have been afforded.” Respondents

Memorandum Brief at 9, filed August 19, 1988. Respondents

also stated to the Tenth Circuit that petitioner Jose Sandoval’s

overpayment of unemployment benefits had been “sus-

pended”, but respondents did not assert that recovery of his

overpayment had been waived pursuant to state regulations.

Id., at 8.

Petitioner Consuelo Sandoval! has formally requested leave

to file a late appeal, and petitioners Daniel Agonafer and Jose

Sandoval have formally requested waiver of recovery of their

overpayments based upon the Colorado Supreme Court deci-

sion in Arteaga, supra. Letter dated February 17, 1989 to respon-

dents’ counsel Maryann Whiteside from petitioners’ counsel

Daniel M. Taubman.

Even if petitioners Jose Sandoval, Consuelo Sandoval and

Daniel Agonafer are now afforded relief by respondents, this

case will not be moot. Three unnamed class members, Oscar

Rivas, Eliodoro Madera and Twumasi Ankrah, all of whom still

seek retroactive unemployment benefits, have come forward

and expressed their interest in serving as class representatives

in the event retroactive relief is ultimately afforded to the class.

district courts in other circuits, “have allowed plaintiffs

to sue a state in federal court for recovery of past unem-

ployment claims, principally on the grounds that the

state’s unemployment compensation fund is a special,

segregated fund as distinguished from a general revenue

fund.” 15a. See, e.g., Brown v. Porcher, 660 F.2d 1001, 1007

(4th Cir. 1981), cert. denied, 459 U.S. 1150, 103 S.Ct. 796

(1983), overruled on other grounds, Wimberly v. Labor &

Industrial Relations Commission, 479 U.S. 511, 107 S.Ct. 821

(1987).

The Tenth Circuit rejected the notion that any legal

significance for the purpose of the Eleventh Amendment

could be attached to the fact that an unemployment trust

fund is “segregated” in nature, that such a fund derives

from separately financed “employer contributions, fed-

eral funding, investment income, and other receipts”, or

that “the state was insulated from liability for amounts

exceeding the resources of the fund.” 15a-17a.

The Tenth Circuit further held that, ultimately, it

would not matter “even if we could find little or no fiscal

impact on the state from plaintiffs’ suit”, because “no

matter what fund a judgment for past damages comes

from, it is still a damage award against the state.” 18a.

Although adopting a different rationale than the

district court, the Tenth Circuit on the foregoing

jurisdictional bases affirmed the dismissal of all the

claims of petitioners. 18a.

iad

REASONS FOR GRANTING THE WRIT

The Tenth Circuit holding that the Eleventh

Amendment bars a federal court from ordering pay-

ment of “retroactive” unemployment insurance

benefits from an unemployment trust fund is in

conflict with the law of the Third, Fourth, Fifth,

Seventh and Ninth Circuits.

The Tenth Circuit decision in this case is in direct

conflict with the law of the Fourth Circuit which has held

that the Eleventh Amendment is not a bar to retroactive

relief derived from an unemployment trust fund. See,

Brown v. Porcher, supra, 660 F.2d at 1007. The holding by

the Tenth Circuit also conflicts with the holdings of the

Third, Fifth, Seventh and Ninth Circuits that similar spe-

cialized funds, insular in character and segregated or

immunized from the general revenues of the state, are

subject to federal court orders of retroactive relief. See,

Infra.

Four and a half years after bringing suit, in a case in

which the respondent Colorado state officials neither in

their Answers nor at any other juncture in proceedings

before the district court or the court of appeals raised the

Eleventh Amendment as a defense, the Tenth Circuit, sua

sponte, has determined that the named petitioners and the

class they represent are effectively barred from obtaining

relief for past violations of federal law. The Tenth Circuit

has cloaked those same state officials with immunity

under the Eleventh Amendment, even though they are

alleged to have systematically denied the petitioners

unemployment insurance benefits for no reason other

than their being aliens, and even though federal law

expressly affords them eligibility. See, 26 U.S.C.

3304 (a)(14)(A).

se)

Three of the individual petitioners and the entire

class of thousands of potentially eligible aliens they rep-

resent are now without any effective remedy either in

federal or state court to redress the past violation of their

rights under federal law. This harsh result has occurred

even though the district court, in the same breath with

which it improperly dismissed the petitioners’ claims,

conceded that if petitioners were correct about the mean-

ing of the PRUCOL phrase, “then all of the plaintiffs and

the class they represent would come within it, and injunc-

tive relief should be granted.” 23

23a. The Tenth Circuit

recognized as much, given that the petitioners’ inter-

pretation of the PRUCOL phrase has essentially prevailed

in individual cases in the Colorado state court system. 6a,

The federal rights under FUTA of thousands of

potentially eligible aliens residing in Colorado were vio-

lated, at least between the time that 26 U.S.C.

§ 3304(a)(14)(A) was enacted in 1976, and the 1985 deci-

sional date by the Colorado Court of Appeals in Arteaga,

the first Colorado state decision to uphold the PRUCOL

standard advanced by petitioners. See, Arteaga v. Indus-

trial Commission, 703 P.2d 654 (Colo. App. 1985), aff'd, 735

P.2d 473 (Colo. 1987). The Colorado state courts have

embraced an interpretation of PRUCOL directly based

upon federal law, and virtually identical to that adopted

]

by the overwhelming majority of jurisdictions which have

interpreted that phrase.” See, Arteaga, supra, 735 P.2d at

[he Colorado Supreme Court has adopted the definition

of PRUCOL first established in the seminal holding of the

second Circuit in Holley v. Lavine, 553 F.2d 845, 849-50 (2d Cir

see, Arteaga, supra, 735 P.2d at 478. | pon invitation by

Court, the Solicitor General of the United States expressed

Continued on following page

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) | (COlO App LYOo cert. Qenlea COLO |

| P i177 } ) \

\ De! i/ LYS).

' + ,? »f 1( > } V11 }

ree of the named petitioners ana th usands of

dentified class members have nowhere to go to vindal

: > . : — I. ] mth y ] >t

those rights. By erecting an Eleventh Amendment

Isak {10

1al bar not relied upon by the re spondent state

( j

he Tenth Circuit has precluded any federal

irt remedy for those individual petitioners and the

} |

ative class members, however meritorious [thel!

R ' ] : : ha . ;

ns Because the statute of limitations Nas run, petl

;

iew that the decision in Holley was correctly decided and

Continued from previous page

ry 1? ]

hat certiorari not be granted. See, No. 77-318,

nNorandum for the United States as Amicus Curiae. This

t lined to review the Holley decision. /d., cert. denied

. iJ} YS S.Ct 1532 (1978)

rado Supreme Court decision in Arteaga is repre-

ir holdings by the overwhelming majority of

have interpreted the PRUCOL phrase. See

‘ {rieaga, 735 P.2d at 479. See also, Berger

956 (2d Cir. 1985)

f the question presented by this petition

t the petitioners are aliens. lo be sure, the

nt by its terms would appear to prohibit

: cts of any Foreign State” trom bringing sult

stat However, this Court has determined that any

iliens, with a claim arising under 42 U.S.(

‘ proct ed in federal court against a state defendant in

rt btain “prospective relief, at least in order to remedy

t I violation of federal law. Edelmua? rdan, 415

664, 94 S.Ct. 1347, 1356 (1974); Gree? Ma ir, 474

} -— * € & 493 iss

Continued n ! l

]

Kit

sane Tes

the

]

—

TAT

fiat

(N.D.I1. January 28, 1982) (Grady, J.) (ordering retroac-

tive payment of unemployment benefits over Eleventh

Amendment objection).

Distinguishing this Court’s holding in Edelman v. Jor-

dan, 415 U.S. 651, 94 S.Ct. 1347 (1974), no less than five

courts of appeals — the Third, Fourth, Fifth, Seventh and

Ninth Circuits - have in other contexts held that the

Eleventh Amendment is not a bar to retroactive relief

which would derive from similar specialized “state”

funds which are separate, insular, segregated or immu-

nized from the general revenues of the state.

For example, the Third Circuit has held that the

Eleventh Amendment does not necessarily bar a damages

award against the Pennsylvania state public school retire-

ment board. Such is the case if the award would derive

not from the state treasury but rather from some other,

distinct source which is “segregated” or “set apart”, over

which the state serves only a “ministerial” rather than

“proprietary” role, which is not subject to “attachment”

for the defaults of the state’s general payment obliga-

tions, or for which the state is itself immunized from

liability in the event the fund cannot meet its obligations.

Blake v. Kline, 612 F.2d 718, 721-26 (3d Cir. 1979), cert.

denied, 447 U.S. 921, 100 S.Ct. 3011 (1980). Similarly,

affirming an order which required the repayment of

employee and employer contributions from the North

Carolina state retirement system, 612 F.Supp. 223

(2.D.N.C. 1985), the Fourth Circuit has rejected the con-

tention that such an order offends the Eleventh Amend-

ment. Almond v. Boyles, 792 F.2d 451, 456 (4th Cir. 1986),

cert. denied, 479 U.S. 1091, 107 S.Ct. 1302 (1987).

See also, Schiff v. Williams, 519 F.2d 257, 262 (5th Cir.

1975) (Edelman does not bar payment of back pay award

from fund composed of student activity fees which would

have “no true impact on the state treasury”); Miller-Davis

Co. v. Illinois State Toll Highway Authority, 567 F.2d 323,

327 (7th Cir. 1977) (Eleventh Amendment does not bar

damages award from Illinois state highway fund, a spe-

cial account held by state treasurer segregated from gen-

eral public funds of the state which were not liable for the

obligations of the highway fund, and any award from

which would only have ancillary effect on the general

funds of the state); Hutchison v. Lake Oswego School Dis-

trict, 519 F.2d 961, 966-67 (9th Cir. 1975) (damages award

ayainst Oregon school board or school district not barred

by Eleventh Amendment where agency is autonomous in

character and state treasury is insulated from judgment).

The Tenth Circuit in this case has expressly rejected

the factual and legal differences which at least five other

circuits, supra, have determined may subject a specialized

fund, like an unemployment trust fund, to a retroactive

damages award for past violations of federal law. See,

15a-18a.

The holding of the Tenth Circuit is problematic on

several counts. The Tenth Circuit has fundamentally mis-

understood the nature of an “unemployment trust fund”.

Further, in contrast to the rule in other circuits, the Tenth

Circuit did not undertake a fact-specific inquiry into the

exact nature of the retroactive relief, and at a minimum

should have remanded this case to the district court for

that purpose. See, e.g., Blake v. Kline, supra. Instead, the

tenth Circuit apparently holds the view that, ultimately,

it does not matter. The Tenth Circuit summarily con-

cluded that “even if we could find little or no fiscal

impact on the state from plaintiffs’ suit’, it would be of

no consequence because “no matter what fund a judg-

ment for past damages comes from, it is still a damage

award against the state.” 18a.

To the contrary, it does matter. If in fact an order of

retroactive relief would not result in a monetary award

satisfied out of the general revenues of the state or some

other comparable source, such an order is not barred by

the Eleventh Amendment. An award of retroactive unem-

ployment benefits payable from the Colorado unemploy-

ment trust fund would not constitute an award against

the state of Colorado for which its state treasury or

general revenues ultimately would be liable.’

10 Under Colorado law, the state treasurer is custodian of a

“special fund administered by the Division of Employment

exclusively for purposes of Article 70 to 82 of this Title”, ie.,

the Colorado Employment Security Act. Colo. Rev. Stat.

§ 8-77-101(1). All taxes, payments in lieu of taxes, fines and

penalties, interest, and “all other monies accruing to the fund

from the federal government or any source whatsoever” are

deposited in a clearing account by the state treasurer. Colo.

Rev. Stat. § 8-77-102(1). Under Colo. Rev. Stat. § 8-77-102(3), the

state treasurer deposits funds received under Colo. Rev. Stat.

§ 8-72-110(5) (funds paid by the Railroad Retirement Board or

other U.S. agencies or by private non-profit organizations or

political subdivisions of Colorado as contributions to the

Employment Security fund), or interest on employer payroll

taxes collected under Colo. Rev. Stat. § 8-79-101, into an unem-

ployment reserve fund. All other amounts in the clearing

account are paid to the Secretary of the U.S. Treasury, to the

count of the state of Colorado. Colo. Rev. Stat. § 8-77-102(4).

(Continued on following page)

Six years ago, this Court declined to disturb the

Fourth Circuit’s interpretation of the Eleventh Amend-

ment even though the issue was squarely presented.

Brown, supra, 459 U.S. 1150, 103 S.Ct. 796 (1983). But see,

459 U.S. at 1153, 103 S.Ct. at 797-98 (White, J., dissenting).

(Continued from previous page)

Under Colo. Rev. Stat. § 8-77-104(1), unemployment bene-

fits are paid from the Colorado account maintained by the U.S.

Treasury. Furthermore, Colorado is not liable to pay benefits if

the account is exhausted. Colo. Rev. Stat. § 8-77-104(5).

Under § 303 of the Social Security Act, 42 U.S.C.

§ 503(a)(4), all money received in the unemployment fund of a

state must be immediately paid to the U.S. Secretary of the

Treasury, “to the credit of the unemployment trust fund.”

Section 904 of the Social Security Act, which is referenced in

the Colorado Employment Security Act, Colo. Rev. Stat.

§ 8-77-102(4), establishes in the U.S. Treasury a “trust fund”.

Under § 303(a)(5) of the Social Security Act, 42 U.S.C.

§ 503(a)(5), all money withdrawn from the unemployment fund

of each state must be spent for the payment of unemployment

compensation. The Federal Unemployment Tax Act also

requires, as a condition of a state’s employers’ receiving credit

ayainst the federal unemployment tax, that all money received

in a state’s unemployment fund shall immediately be paid over

to the Secretary of the U.S. Treasury, 26 U.S.C. § 3304(a)(3), and

that all money withdrawn from these unemployment funds be

“used solely in the payment of unemployment compensation”,

26 U.S.C. § 3304(a)(4).

Thus, under both Colorado and federal law, the employer

taxes collected by the state of Colorado are held in the U‘S.

Treasury and are available only for the payment of unemploy-

ment compensation benefits. The Tenth Circuit is legally and

factually wrong to conclude that these funds are part of the

Colorado state treasury or even to imply that the state of

Colorado is liable for the benefits if the fund is depleted.

This Court has declined to disturb similar holdings in

other contexts by the Third and Fourth Circuits, Blake v.

Kline and Almond v. Boyles, supra.

The Court should hear the present case in order to

resolve the conflict among the circuits created by the

Tenth Circuit decision.

This Court should examine the important question

whether Hans v. Louisiana, 134 U.S. 1 (1890), was

incorrectly decided and should be overruled.

On four occasions in recent years, four members of

this Court have urged that “it is time to begin a fresh

examination of Eleventh Amendment jurisprudence with-

out the weight of [the] mistaken precedent” of Hans v.

Louisiana, 134 U.S. 1, 10 S.Ct. 504 (1890). See, Welch v.

Texas Dept. of Highways, ____ U.S. __, __, 107 S.Ct. 2941,

2958-70 (1987) (Brennan, Marshall, Blackmun and

Stevens, dissenting); Papasan v. Allain, 478 U.S. 265, 292,

106 S.Ct. 2932, 2948 (1986) (same, dissenting in relevant

part); Green v. Mansour, 474 U.S. 64, 74, 106 S.Ct. 423, 429

(1985) (same); Atascadero State Hospital v. Scanlon, 473 U.S.

234, 247, 105 S.Ct. 3142, 3150 (1985) (same).

The Tenth Circuit decision in this case epitomizes

what has gone wrong with, and the inherent injustices

which directly flow from, the “expansion” of the

“egregiously incorrect” decisions in Edelman v. Jordan,

supra, and its progenitor, Hans v. Louisiana, supra. See,

Atascadero, supra, 473 U.S. at 304, 105 S.Ct. at 3179

(Stevens, dissenting).

« The petitioners nearly five years ago sought the pro-

tection of a federal court in order to vindicate their rights

under federal law. The petitioners did so with reasonable

expectations, based upon then prevalent understandings

of Eleventh Amendment limitations on federal court

jurisdiction, namely, that a federal court would hear their

claims, determine what their federal rights are, and

afford a remedy, including retroactive payment of unem-

ployment benefits wrongfully withheld in order to rem-

edy past violations of those rights."

That is exactly what has not happened. At every turn,

their efforts to vindicate violations of federal law by the

respondents have been thwarted by the federal courts

below. Notwithstanding the unassailable principle that

“[t]he federal courts were created to vindicate the consti-

tution and laws of the United States”, Hanna v. Toner, 630

F.2d 442, 443 (6th Cir. 1980), cert. denied, 450 U.S. 919, 101

S.Ct. 1365 (1981), the petitioners have been told that, if

their federal rights were violated, a federal court is not

where they may obtain a remedy. Contrary to the

assumption of the Welch plurality that the Eleventh

Amendment doctrines which have evolved in recent

years do not leave aggrieved individuals without a rem-

edy,___ U.S. at __, 107 S.Ct at 2953, that is precisely what

has happened to three of the named petitioners and the

'! As discussed in note 8, supra, it is irrelevant that peti-

tioners are aliens. Should this court determine that the Elev-

enth Amendment was intended to bar only citizen-state and

alien-state diversity suits in federal court asserting state law

claims against a state, then the Eleventh Amendment is inap-

plicable to this case. Petitioners assert claims only under fed-

eral law,

entire class of thousands of unidentified aliens who rea-

sonably pursued their remedy in federal court rather than

state court.

The decision in this case exemplifies the “erratic and

irrational results” and the “crazy-quilt pattern” of rules

which the Hans doctrine has wrought. See, Welch, supra,

US. at __, 107 S.Ct. at 2970 (Brennan, dissenting).

Instead of vindicating the supremacy of federal law, the

Tenth Circuit has erected the Eleventh Amendment as an

ever expanding constitutional icon which represents an

assurance that “States may refuse to follow federal law

with impunity”. See, Green v. Mansour, supra, 474 U.S. at

77, 106 S.Ct. at 430 (Brennan, dissenting).

In recent years, there has emerged an increased

awareness that the Eleventh Amendment, rather than

having been intended generally to insulate the states

from suits brought in federal court by citizens or aliens,

had its historical purpose in prohibiting citizen-state and

alien-state diversity suits asserting state law claims

ayainst a state. See, e.g., authorities cited in Atascadero,

supra, 473 U.S. at 258 n.11, 105 S.Ct. at 3155 n.11 (Brennan,

dissenting).

The Court should review this case in order to exam-

ine whether the doctrines of Hans v. Louisiana and its

progeny are sound in principle and rationale, or whether

they “rest on ‘misconceived history and misguided log-

ic’ ”. Atascadero, supra, 473 U.S. at 303, 105 S.Ct. at 3178

(Blackmun, dissenting).

CONCLUSION

Based upon the foregoing, the petition for a writ of

certiorari should be granted.

Respectfully submitted,

BRIAN Parrick LAWLOR

Legal Aid Foundation of

Los Angeles

1636 W. Eighth St., Suite 313

Los Angeles, California 90017

DANIEL M. TAUBMAN (213) 389-3581

Colorado Coalition of Legal

Services Programs Counsel of Record

1905 Sherman St., Suite 710 : ;

Denver, Colorado 80203 CHares WHEELER

ReBeccaA CHIAO

GLENN MEYERS National Center for

Colorado Rural Legal Immigrants’ Rights

Services, Inc. 1636 W. Eighth St., Suite 215

2801 E. Colfax Ave., Suite 104 Los Angeles, California 90017

Denver, Colorado 80206 (213) 487-2531

is rep] , AnD

Counsel for Petitioners

February 24, 1989

PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

MARIA ESPARZA, EUDESIMO

ARTEAGA, REYES NUNEZ-

ORTEGA, BAHMAN ZANJANI,

individually and on behalf of all

others similarly situated, DANIEL

AGONAFER, JOSE SANDOVAL,

and KAZIMIEREZ KOZAK,

Plaintiffs-Appellants,

CONSUELO SANDOVAL,

Applicant for Joinder-

Appellant,

RUBEN VALDEZ, Executive

Director, Colorado Department of

Labor, JOHN KEZER, Director,

Division of Employment and

Training, INDUSTRIAL COMMIS-

SION OF COLORADO, (Ex-Offi-

cio the Unemployment

Compensation Commission), in

their official capacities,

Defendants-Appellees.

)

iIn®.

85-2187

Appeal from the United States District Court

for the District of Colorado

(D.C. No. 84-M-1180)

(Filed Nov. 29,

1988)

The district court dismissed plaintiffs’ claims because

none had shown that a state administrative tribunal had

denied unemployment benefits to any individual alien

during a period the alien had held an INS “indefinite

stay” status. The court evidently concluded that this indi-

vidualized consideration precluded class representation.

Ihe district court entered a final judgment dismissing all

plaintiffs’ claims without prejudice, leaving them free to

pursue their individual claims on the merits before the

INS and the state agency. The court did not address the

“lawfully present for performing services” provision of

S 3304(a)(14)(A), nor was that provision seriously urged

upon the court as a basis for plaintiffs’ eligibility. The

plaintiffs’ request for attorney’s fees was denied and their

other statutory and constitutional claims were not

addressed.

While this action was being prosecuted in federal

court, three of the plaintiffs were pursuing simultaneous

appeals of the denial of their benefits in the Colorado

state court system. Ultimately, the Colerado Supreme

Court ruled in favor of all three plaintiffs, finding that

they fit within the PRUCOL exception to the prohibition

on alien benefits. See Industrial Comm'n v. Arteaga, 735

2d 473 (Colo. 1987); Division of Employment and Training

v. Turynskt, 735 P.2d 469 (Colo. 1987). Subsequently, two

other plaintiffs were granted relief by the state because of

state administrative appeals they had pending at the time

the Arteaga and Turynskt decisions were announced.

Noting the Colorado Supreme Court decisions, this

court issued an order to the parties to show cause why

the entire appeal should not be dismissed as moot or

because of the preclusive effect of the Colorado decisions.

Responding,-the state argued for dismissal on the basis

that those who appealed in state court had obtained

essentially the relief they sought and no longer had a

justiciable claim, and that the others’ failure to pursue

state appeals should preclude prosecution of a § 1983

claim. The United States as amicus curiae argued that the

case was not moot because the district court opinion was

a declaratory judgment on the meaning of the PRUCOL

provision of FUTA, not an adjudication of individual

claims. It also asserted that we should not vacate the

earlier district court opinion, which it asserts correctly

interprets the PRUCOL provision, because of later incor-

rect state court opinions that put the state on a collision

course with federal authorities.! Plaintiffs argue that the

cause is not moot because some plaintiffs have not been

given relief and the others may still serve as class repre-

sentatives. They also assert that federal common law

principles and certain provisions of CESA prohibit our

viving preclusive effect to the state court decisions.

o 5b

In their complaint, plaintiffs request both prospective

relief, in the form of a declaration and injunction prohib-

iting the state from future violations of federal law, and

retrospective relief, embodying claims for accrued bene-

fits wrongfully withheld. We deal first with the claim for

prospective relief.

[he brief for the United States was prepared by the

Office of Immigration Litigation, Department of Justice. Curi-

ously, the Department of Labor remains silent in this dispute.

_—

An established principle of federal jurisprudence is

that “an actual controversy must exist at all stages of

appellate review, not merely at the time the complaint is

filed.” Honig v. Doe, 108 S. Ct. 592, 607 (1988) (Rehnquist,

C.J., concurring). Jurisdiction over plaintiffs’ claims for

future relief is appropriate only if a “reasonable likeli-

hood” exists that plaintiffs or other aliens they seek to

represent will again be subjected to denials of benefits

based on an eligibility interpretation of the unemploy-

ment statute different from that which they assert as

correct. See id. at 601 (majority opinion). In the period

since the district court’s decision in this case, there have

been several major developments that we believe pre-

clude the reasonable likelihood of a reoccurrence of the

complained-of interpretation. Therefore we dismiss as

moot the claims for prospective declaratory and injunc-

tive relief.

First we point to the Colorado Supreme Court’s deci-

sions in Arteaga and Turynskt. Without expressing an

opinion on the correctness of their interpretation of the

PRUCOL provision, we note that the Colorado Supreme

Court reads the provision more expansively than did the

district court in the decision before us for review. The

district court apparently would require alien claimants to

have been granted express or formal “indefinite stay”

status by the INS. The Colorado Supreme Court granted

unemployment compensation to aliens who did not hold

such status.

In Arteaga, aliens married to American citizens had

applied for permanent status on the basis of that mar-

riage, and, pursuant to its practice of not deporting dur-

ing the pendency of such cases, the INS had permitted

the aliens to work. The Colorado Supreme court found

these aliens qualified for benefits under the PRUCOL

provision. In Turynski, the court made the same finding

when deportation proceedings were stayed against appli-

cants for political asylum, basing the ruling on the Attor-

ney General’s grant of “extended voluntary departure” to

a class of aliens that included the claimants, and because

these aliens had received INS work authorization for the

relevant periods. Thus, these decisions gave unemploy-

ment benefits under PRUCOL to aliens who did net have

‘

individualized formal grants of an “indefinite stay” sta-

tus by the INS, but who had been authorized to work.

At most, plaintiffs in the present case seek a declara-

tion that an otherwise eligible alien claimant qualities

under PRUCOL whenever the INS knows of the alien’s

presence in the United States and, by either action or

inaction, has acquiesced in his continued presence. We

believe the Colorado decisions have adopted such an

interpretation; at least they clearly have adopted a stan-

dard that would provide relief to many more of the

individual and class plaintiffs than under the district

court’s standard.

Further, in 1985 Colorado amended CESA to provide

a definition of the PRUCOL provision that would cover

lQa

’ \ + the > -] ITY) Wt ilo tho ,TY) Y) ay Yr)? YrowvIANy sty

Lit Or LLllesct CialmMs y N1li€ tne amenamnel ail rua \

1 MT) . T . : 4

; } + {7 _rTn + + + }

ricts the PRUCOL provision interpretation of Arleaga

i hat provision proviaes as follows:

(a) Benefits shall not be payable on the basis ot

services performed by an alien urless such alien is an

individual who was lawfully <¢ dmitted for permanent resi-

dence at the time such services were performed, or was

lawfully present for purposes of performing such services

Yr was permanently residing in the United States under

re of law at the time such services were performed. For

roses of the ‘Colorado Employment Security Act, ‘per

manent resident under color of law’ shall mean:

\n alien admitted as a refugee under section 207

f the ‘Immigration and Nationality Act’, 8 U.S.C. § 115

in effect after March 31, 1980;

Ail

’ An alien granted asvlum by the attorney general

An alien granted asylum g

of the United States under section 208 of the ‘Immigration

and Nationality Act’, 8 U.S.C. § 1158;

(11) An alien granted a parole into the United States

for an indefinite period under section 212(a)(5)(B) of the

‘Immigration and Nationality Act’, 3 a |

S 1182(d){5)(B);

dV) An alien granted the status as a conditional

entrant refugee under section 203(a)(7) of the ‘Immigration

and Nationalitv Act’, 8 U.S.C. § 1153(a)(7), in effect prior

(V) An alien who entered the United States prior to

lune 30, 1948, and who is eligible for lawful permanent

residence pursuant to section

alitv Act’, 8 U.S.C. § 1259; or

\/] ] ] } } 1] j

ty An alien who has been ftormaliyv granted

} { } t + rt } +} . r

ieferred action or nonprio! itus bv the immigration

] + y

4 | it i ZAI } ot a

lla

and Turynski, the Colorado Court of Appeals has con-

strued it to have no such effect. See Sandoval v. Colorado

Div. of Employment, 757 P.2d 1105 (Colo. Ct. App. 1988),

cert. denied, Colo. Sup. Ct., Oct. 17, 1988. The Sandoval

court afforded relief under the statute even to an alien

who lacked work authorization but who had a petition

for adjustment of status pending during his work base

period.

Even if the Colorado decisions would not grant the

prospective relief sought by all individual plaintiffs and

members of the class sought to be certified, two addi-

tional intervening developments together serve to render

this controversy moot. First, in § 274A(a)(1) of the Immi-

gration Reform and Control Act of 1986 (IRCA), 8 U.S.C.

§ 1324a(a)(1), Congress made it unlawful for an employer

to hire an alien who lacks INS work authorization or

other formal government authorization. Thus, plaintiffs

appear to be foreclosed from seeking relief for aliens

lacking such authorization.®

3 We are uncertain whether plaintiffs seek relief for aliens

not having work permits. At one place in the record plaintiffs’

counsel stated that his clients “do not contend ... that [INS]

employment authorization is required or needed to be found

under color of law or to be eligible for unemployment bene-

fits.” IV R. 5. But counsel had earlier acknowledged that cach

plaintiff did have such authorization. Id. at 4. And from the

record it appears the INS routinely grants work authorization

to all of those who have a request for permanent status pend-

ing, and, under some plausible theory, are eligible for such

status. Further, to be eligible for unemployment insurance

benefits a claimant must be available for work, which for an

alien means having valid authorization to work from the INS.

See DOL Letter No. 1-86, supra, § 4(a)(2).

l2a

Second, to the extent aliens have work authorization

during their base period and at the time benefits are

claimed, the Department of Labor (DOL) has issued an

opinion letter directing state agencies to grant them bene-

fits if they are otherwise eligible. Unemployment Insur-

ance Program Letter No. 1-86, 51 Fed. Reg. 29,713 (1986)

[hereinafter DOL Letter No. 1-86]. In that letter, the DOL

adopted an interpretation of the PRUCOL provision very

similar to that of the district court. Id. § 4(d). However, it

interpreted the “lawfully present for purposes of per-

forming services” provision of FUTA § 3304(a)(14)(A) to

encompass “aliens who are permitted to work by the INS

regardless of their status in the United States.” DOL

Letter No. 1-86, supra, § 4(c)(3). Thus, the individual and

class plaintiffs will now receive the relief they seek,

although possibly under a different clause in FUTA

S 3304(a)(14)(A). If Colorado officials were to ignore this

directive, an alien claimant would have recourse to the

Colorado courts. There, an appellate court already has

relied on DOL Letter No. 1-86 in granting benefits to an

alien that a state agency had found ineligible under the

PRUCOL provision. See Bushehri v. Industrial Claims

Appeals Office, 749 P.2d 439 (Colo. Ct. App.), cert. dented,

(Colo. Sup. Ct., Oct. 8, 1987).

It is true, of course, that the political winds on the sea

of federal agency interpretation could blow ina different

direction at a future date, making further interpretation

of the PRUCOL provision necessary, but that possibility

is too speculative and remote to bring this case vithin

any exception to the traditional mootness doctrine. See

Honig, 106 5. Ct. at601; Murphy v. Hunt, 455 U.S. 478, 482

l3a

(1982). Therefore we dismiss plaintiffs’ claims for pro-

spective relief as moot.

Plaintiffs also seek the payment of past unemploy-

ment benefits that they assert were wrongfully withheld.

The claims of those who pursued their appeals in the

state system and were awarded relief as a result of the

Arteaga and Turynski opinions are moot, of course. But we

must consider the claims ef those plaintiffs and members

of the putative class who chose not to appeal in the state

courts.4

We have significant Eleventh Amendment concerns

here because plaintiffs seek a judgment for direct pay-

ments from a state-administered fund for past violation

of alleged federal rights.*> Because each claimant would

4 These claims also might be moot if the aliens were per-

mitted to have their claims reexamined by the state under the

revised eligibility standards discussed above. CESA imposes a

“good cause” limitation, however, on the reopening of claims

not appealed within a certain time, see Colo. Rev. Stat.

§ 8-74-106, and even were this not a bar to reexamination,-it 1s

unclear whether the Colorado courts and agencies would

apply eligibility standards other than those that existed at the

time the claims were filed. See Arteaga, 735 P.2d at 477 n.7

(DOL Letter No. 1-86 would not be applied because it was not

in effect at time claims arose). Thus, we do not regard these

claims as moot.

> All defendants have been sued in their official capacities,

which is the same as if the state itself had been sued. See

Eastwood v. Department of Corrections, 846 F.2d 627, 632 (10th

Cir. 1988).

15a

we should follow these circuits, and therefore we will

consider the Eleventh Amendment issues in this case.

Insofar as we are being asked for a declaration that

state officers’ past action in interpreting FUTA (or the

state’s identical section) was in violation of federal rights,

the Supreme Court, in Green v. Mansour, 474 U.S. 64, 73

(1985), stated as follows:

“We think that the award of a declaratory judgment

in this situation would be useful in resolving the

dispute over the past lawfulness of respondent’s [a

state officer’s] action only if it might be offered in

state-court proceedings as res judicata on the issue of

liability, leaving to the state courts only a form of

accounting proceeding whereby damages or shgperyel

tion would be computed. But the issuance of «

declaratory judgment in these circumstances oie

have much the same effect as a full- fledged award of

damages or restitution by the federal court, the latter

kinds of relief being of course prohibited by the

Eleventh Amendment.”

An award of damages to be paid directly out of state

funds for federal law violations also is prohibited gener-

ally by the Eleventh Amendment. Edelman, 415 U.S. at

663. But some district courts and one circuit have allowed

plaintiffs to sue a state in federal court for recovery of

past unemployment claims, principally on the grounds

that the state’s unemployment compensation fund is a

special, segregated fund as distinguished from a general

revenue fund. See Brown v. Porcher, 660 F.2d 1001, 1007

(4th Cir. 1981), cert. denied, 459 U.S. 1150 (1983), overruled

on other grounds, Wimberly v. Labor & Indus. Relations

Comm'n, 479 U.S. 511 (1987). The validity of this distinc-

tion has been questioned by three Justices dissenting

from the denial of certiorari in that case. See Porcher v.

j }

Brown, 459 U.S. 1150, 1153 (1983) (White, J., joined by

Powell & Rehnquist, JJ., dissenting from denial of cer

tiorari). We have great difficulty with the distinctions

drawn by the Fourth Circuit and the district courts on

which it relies, especially considering the similarity

between the unemployment compensation scheme under

FUTA, and the federal-state program at issue in Edelman

The program in Edelman concerned aid to the aged, blind

or disabled; it was administered pursuant to federal regu

lations, and involved monies in the state treasury that

came in part from the federal government. See also Roths

tein v. Wyman, 467 F.2d 226, 236-38 (2d Cir

denied, 411 U.S. 921 (1973)

1972),

We do not believe that a state’s sovereign immunity

from suits for past damages can be abrogated through

reliance on notions of whether such relief would be paid

out of a general or special revenue fund. Either way, an

injunction ordering retroactive benefits effectively would

be “an award of money damages for past violations of

federal law” that is precluded by the Eleventh Amend

ment. Green, 474 U.S. at 69-70 (citing Edelman, 451 U.S. at

fhe Supreme Court has rejected the notion that an

award of damages out of a state fund is constitutional

when the fund has been segregated for a special purpose

In Kennecott Copper Corp. v. State Tax Comm'n, 327 U.S. 573

(104 one NI 6 ; - Dent 299 11 -

(1 Y+60), and Great iN Lb ( Ins L ¢ INCU links % >. 4,

(1944), taxpayers sued state officials attempting to

recover taxes paid under protest where the money was

segregated and held in trust pending determination ot

tne taxpayers’ rights In both cases, the Court hela that

tly T4111 itty ro] 4 r 1 } } } }

Litt SUITS effectively Wer» AVvALNSI at Stal LE ANnQd t |

17a

barred by the Eieventh Amendment. Kennecott, 327 U.S.

at 576-77; Great N. Life, 322 U.S. at 53. The Court observed

that the statute at issue in Great Northern providing for

the special segregation of tax funds was very similar to a

statute involved in a case where the Eleventh Amend-

ment was held to bar suit “except for the immaterial

difference that the money collected is directed to be held

separate and apart by the collector instead of being held

in the general funds of the State Treasurer.” Id. at 53

(citing Smith v. Reeves, 178 U.S. 436 (1900)) (emphasis

urth Circuit apparently thought it significant

ney paid into the state unemployment fund

s sep@rately financed by “employer contributions, fed-

eral funding, investment income, and other receipts,” and

state was insulated from liability for amounts

erceeding the resources of the fund. See Brown, 660 F.2d

»+

hese also are features of the Colorado Unem-

ployment Compensation Fund. But it seems illogical to

base a state’s immunity on whether it raises certain reve-

nue by taxing its individual residents, employers, busi-

nesses, or products. Immunity should not depend on

which aspect of the state’s tax base it seeks to utilize. And

the Supreme Court already has rejected the notion that a

state waives its immunity merely by receiving federal

assistance. See Edelman, 415 U.S. at 673.6

own program through general revenues. In such a case no

argument could be made that an award of damages would be

permitted by the Eleventh Amendment. The Fourth Circuit in

effect holds that by mere participation in a federal program

that mandates a special fund, the state has waived its Eleventh

Amendment immunity.

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2la

common to both the state and federal statutes. The plain-

tiffs contend that the language and legislative history

support the conclusion that entitlement to benefits may

be earned by any aliens whose presence in the United

states is known to the INS and that agency has acqui-

esced in the continued residence of the worker by some

action or inaction. The INS, in its amicus brief, urges a

very restrictive interpretation, limiting the category to

aliens who have a lawful immigration status — conditionat

entrants, refugees and certain parolees. Essentially, cover-

age would be provided only to those who fall within the

explanatory parenthetical in the statute. The defendants

agree with the INS’ position but also recognize that

“color of law” is an indefinite phrase often used to permit

consideration of individual circumstances. Accordingly,

the defendants make the following suggestion at page 15

of their brief:

The broadest possible construction which could be

given to this phrase consistent with legislative intent

and case law, would make eligible those aliens who,

after review of their particular factual circumstances

pursuant to a specific statutory or regulatory pro-

cedure, have been granted an immigration status

which allows them to remain in the United States for

an indefinite period of time.

That suggested construction is consistent with the

language of the act, the legislative history, and the com-

plexity of the policy considerations involved. The deter-

mination of what persons shall be admitted to the United

States for what purposes are matters which are funda-

mental questions of national sovereignty, and these are

peculiarly questions of federal law. The Congress has

enacted a complex set of statutes on the subject and has

created the INS as an agency with broad powers, both

regulatory and adjudicatory. The Supreme Court has

recently recognized the importance of giving due defer-

ence to the INS in alien matters. Immigration and Natural-

ization Service v. Rios-Pineda, 53 U.S.L.W. 4537, 4539 (U.S.

May 13, 1985). What appears clear to this court is that in

amending FUTA, Congress recognized the many ways in

which an alien may have some status to continue indefi-

nite residence in the ‘United States as a result of statute,

regulation or adjudicative proceedings, where that status

does not fall within some classification which could be

the basis for statutory reference in defining the exclusion

from coverage for unemployment benefits.

The case emphasized by the plaintiffs is illustrative

of the point. Holley v. Lavine, 553 F.2d 845 (2d Cir. 1977),

cert denied, 435 U.S. 947 (1978). There, the INS informed a

Canadian citizen with six American citizen children that

she would not be deported at least until her children are

grown. That discretionary act by the INS gave “color of

law” to her status as a resident of the United States.

Adoption of the plaintiffs’ position would seriously

erode the government’s ability to deal with the problem

of illegal aliens. It would permit any alien, without

regard to the legality of his entry, to obtain a job, make

his presence known to the INS by the filing of some

application, and, in the absence of deportation, claim that

his residence was “under color of law.” Congress has not

indicated an intention to place such persons into the

unemployment compensation benefits program.

Jurisdiction in this case depends upon the plaintiffs’

common claim to the broad construction of the statute. If

BEER HHI

23a

color of law is given the meaning which plaintiffs urge,

then all of the plaintiffs and the class they seek to repre-

sent would come within it, and injunctive relief should be

granted. The adoption of the state’s alternative sugges-

tion gives a different result. While the plaintiffs’ claim

has presented a case or a controversy requiring inter-

pretation of federal law under 28 U.S.C. § 1331, and

presents a claim for relief under 42 U.S.C. § 1983 for the

denial by the state officials of benefits to which the plain-

tiffs claim entitlement under federal law, the court’s more

limited construction of the statute requires individual

consideration of the status of each applicant. That is a

matter to be decided under the adjudicative processes

provided by statute and regulation. Here none of the

plaintiffs have alleged that they have been injured by

state officials because of a violation of the federal statute

as interpreted by this court, i.e. that a state administrative

tribunal, after a review of the factual circumstances of

each case, denied unemployment benefits during a

period in which plaintiffs held an immigration status

which allows them to remain in the United States indefi-

nitely. This court under § 1983 has jurisdiction to review

actions of persons operating under color of state law; it

has no power to conduct a de novo review of the immi-

gration status of the individual plaintiffs. It is the view of

this court that there is no basis for an award of attorney’s

fees to any party to this action.

Upon the foregoing, it is

ORDERED, that the court declares that the correct

construction of the disputed phrase “was permanently

residing in the United States under color of law .t the

time such services were performed (including an alien

24a

who was lawfully present in the United States as a result

of the application of the provisions of section 203(a)(7) or

section 212(d)(5) of the Immigration and Nationality

Act,” is that the phrase makes eligible those aliens who

after review of their particular factual circumstances pur-

suant to a specific statutory or regulatory procedure,

have been granted an immigration status which allows

them to remain in the United States for an indefinite

period of time. And it is,

FURTHER ORDERED, that plaintiffs’ motions for

class certification, for leave to amend the complaint, to

supplement the complaint, and to add or join party plain-

tiff Consuelo Sandoval are denied, and it is

FURTHER ORDERED, that determinations of eligi-

bility are individual adjudicative decisions which must

be made pursuant to the established processes which do

not involve this court, and that, therefore, the individual

claims for injunctive relief are denied, without prejudice

to the merits of their claims, and it is

FURTHER ORDERED, that the Clerk of this court

shall forthwith enter a final judgment as a declaratory

judgment interpreting the subject statute, and dismissing

the plaintiffs’ claims without prejudice.

Date

d: June 25th, 1985

BY THE COURT:

12)

/s/ Richard P. Matsch

Richard P. Matsch, Judge

25a

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Civil Action No. 84-M-1180

MARIA ESPARZA, EUDESIMO ARTEAGA, REYES

NUNEZ-ORTEGA, and BAHMAN ZANJANI, individu-

ally and on behalf of all others similarly situated,

Plaintiffs,

RUBEN VALDEZ, Executive Director, Colorado Depart-

ment of Labor; JOHN KEZER, Director, Division of

Employment and Training, and INDUSTRIAL COMMIS-

SION OF COLORADO, (Ex-Officio the Unemployment

Compensation Commission), in their official capacities,

Defendants.

AMENDED JUDGMENT

(Filed July 5, 1985)

Pursuant to the Memorandum Opinion and Order,

signed by the Honorable Richard P. Matsch, United States

District Judge, and entered on June 25, 1985, and the

Order Amending Order and Judgment, entered July 5,

1985, it is

ORDERED, that the correct construction of the

phrase “was permanently residing in the United States

under color of law at the time such services were per-

formed (including an alien who was lawfully present in

the United States as a result of the application of the

provisions of section 203(a)(7) or section 212(d)(5) of the

Immigration and Nationality Act,” in 26 U.S.C.

S 3304(a)(14), is that the phrase makes eligible those

26a

aliens who, after review of their particular factual circum-

stances pursuant to specific statutory, regulatory or adju-

dicative proceedings, have been granted an immigration

status which allows them to remain in the United states

for an indefinite period of time, and it is

FURTHER ORDERED, that the plaintiffs’ individual

claims for relief are dismissed without prejudice and

without the award of costs or attorney’s fees to any party.

DATED at Denver, Colorado, this 5th day of July,

L985.

APPROVED: FOR THE COURT:

JAMES R. MANSPEAKER,

CLERK

/s/ Richard P. Matsch By: Stephen P. Ehrlich

Richard P. Matsch, Stephen P. Ehrlich,

Judge Chief Deputy

—/ a

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

N( IVEMBER 30, 1988

Before Honorable James K. Logan, Honorable Robert H.

McWilliams and Honorable Deanell R. Tacha, Circuit

Judges.

RIA ESPARZA, EUDESIMO _ )

aI TEAGA, REYES NUNEZ- ) JUDGMENT

IRTEGA, BAHMAN ZANJANI, No. 85-2187

SMgiluatly and on behalf of all) DC #

<a aa (D.C. #84-M-1180

others similarly situated, DANIE]

AGONAFER, JOSE SANDOVAL, _ )

and KAZIMIEREZ KOZAK,

)

Plaintiffs-Appellants,

CONSUELO SANDOVAL,

Applicant for Joinder ]

in Class Action-Appellant,

RUBEN VALDEZ, Executive )

Director, Colorado Department of |)

Labor; JOHN KEZER, Director, _ )

Division of Employment and _)

Training, and INDUSTRIAL COM-_ )

MISSION OF COLORADO, (Ex-_ )

Officio the Unemployment Com )

pensation Commission), in their

official capacities,

Defendants-A ppellees,

NATIONAL EMPLOYMENT LAW _ )

aa ah lr, FEDERATION FOR )

MERICAN IMMIGRATION )

Ret IRM, UNITED STATES OF

AMERICA,

i Amici Curiae,

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